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Why there will never be another Bitcoin

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Re: Why there will never be another Bitcoin

#21

Post by friend_and_foe »

> ...and this makes it incredibly unlikely Bitcoin will ever be outcompeted by a government or private market alternative.

The premise of the article. I don't believe this for a second.

Imagine the delusional hopefulness one would have to have to believe that something will, for eternity, not be superseded. Nothing in the history of humanity, or even life, remains unsurpassed from it's inception. Yet somehow this thing is unbeatable.

There are cryptocurrencies out there that meet all of the criteria that is laid forth in the article as the reason for this conclusion. True, most, I'd say almost all, don't, as the article does point out, but some do. So what's the secret sauce that makes those currencies incapable if it isn't simply these criteria laid out? Is it magic? Is it some emergent property we have yet to comprehend? If so, why not say it in the article? No, the article says those traits are all you need to draw that conclusion and yet, there's no compelling reason why that's the case. It's hand waving.

The criteria not mentioned is network effects. But we know, network effects are not an insurmountable obstacle. So the conclusion still does not follow. Those criteria are a must, and network effects make it incredibly difficult to supersede bitcoin, but not impossible.

I say the opposite: bitcoin's demise is inevitable. Not because I don't like bitcoin, don't believe in it, think it's a scam. I am a bitcoiner. But because nothing lasts forever, bitcoin isn't perfect, and there are people out there trying to make it better that aren't getting their PRs merged and/or making it to consensus to become a part of the network software.

I can think of at least one cryptocurrency that is better than bitcoin in every way, that meets all the criteria in the article, but just doesn't have the network effects. And to surmount that, the technical superiority, the benefit to the user to switch has to be so compelling that network effect diminishes. It's not enough to be marginally better, it has to be astronomically better. Maybe that one I have in mind doesn't have that, but you can bet that one will be made that will have that eventually.

Re: Why there will never be another Bitcoin

#22

Post by odyssey7 »

_heimdall wrote: post #10
odyssey7 wrote: post #5

> Some predecessors, like DigiCash, were too reliant on trusted authorities and so never gained market acceptance. Aren’t bitcoin holders trusting that no authority/state actor is going to 51% attack the blockchain?

More specifically, bitcoin holders are trusting that some collection of entities with more than 50% share of the mining power won't collude. It seems like a reasonable assumption honestly, everyone would know and value would tank. I'm by no means a fan of bitcoin, but miner collusion was never what kept me away. I like the original arguments for bitcoin related to a decentralized currency and privacy. Neither have pr…

If a party could control the irregular tide of Bitcoin’s value rising and crashing, then it holds a means to stimulate or impoverish whatever economies rely on Bitcoin. This could be particularly attractive for parties who want to avoid formally declaring sanctions or for situations where sanctions might not be effective.

I would see a 51% attack as a nuclear option, since it could take a while for cryptocurrency users to once again believe that the network is secure, but you could imagine a situation where there is geopolitical conflict with a country, the people in that country adopt a cryptocurrency due to fiat currency collapse, and then it becomes useful to induce a cryptocurrency collapse as well.

Edit: oops, might have added this comment in the wrong place.

Re: Why there will never be another Bitcoin

#23

Post by greyface- »

phire wrote: post #20
TacticalCoder wrote: post #18

Earlier quoted context omitted.

> What happens to existing hardware at that point? Resold for video games? Sold to people who have cheaper electricity? I think some is sold to people who have cheaper electricity. Some miners shall probably also mine at a loss for a while, sitting on reserves, while smaller ones dies. Cannot resell for video games: Bitcoin is mined using dedicated ASICs since many years. And Ethereum, the second biggest after Bitcoi…

> I don't understand how it'd work out: too little BTCs rewarded per block The math only works out if value of bitcoin continues to increase in value, at least a constant 25% annual return, year after year (on top of inflation). If the price of bitcoin ever stabilises (or worse, drops) over the long term, then the security of bitcoin will go down, until eventually it becomes viable for someone to launch a 51% attack.

100% return over 4 years refigured as constant annual return is 19%, not 25%, due to compounding.

Re: Why there will never be another Bitcoin

#24

Post by friend_and_foe »

dpiers wrote: post #12

Oh, please. Bitcoin is a protocol with no more inherent value than SMTP. Aside from being the Catholic cryptocurrency, it has been surpassed technologically in every way by newer and better designed protocols. Why would anyone who doesn't already own Bitcoin choose to use it for anything over, ex. Ethereum? Bitcoin maxis aren't technologists; they're grifters trying to convince you their magic beans are the most spec…

There are reasons why you'd choose bitcoin over your example, ethereum. For one, supply of ethereum is not deterministically predictable. As money, that makes it less compelling. Some other technical details are very short block time means network splits, orphaned blocks, reorgs are very common. In the short term, ethereum finality is not as reliable.

Generally I agree with your point though. Money over IP can takeany forms, and the likelihood that the first form it took is the best it could possibly be is miniscule.

Re: Why there will never be another Bitcoin

#25

Post by woleium »

phire wrote: post #20
TacticalCoder wrote: post #18

Earlier quoted context omitted.

> What happens to existing hardware at that point? Resold for video games? Sold to people who have cheaper electricity? I think some is sold to people who have cheaper electricity. Some miners shall probably also mine at a loss for a while, sitting on reserves, while smaller ones dies. Cannot resell for video games: Bitcoin is mined using dedicated ASICs since many years. And Ethereum, the second biggest after Bitcoi…

> I don't understand how it'd work out: too little BTCs rewarded per block The math only works out if value of bitcoin continues to increase in value, at least a constant 25% annual return, year after year (on top of inflation). If the price of bitcoin ever stabilises (or worse, drops) over the long term, then the security of bitcoin will go down, until eventually it becomes viable for someone to launch a 51% attack.

difficulty also updates every couple of weeks.

less folk mining means less energy per coin mined

Re: Why there will never be another Bitcoin

#26

Post by phire »

woleium wrote: post #25
phire wrote: post #20

Earlier quoted context omitted.

> I don't understand how it'd work out: too little BTCs rewarded per block The math only works out if value of bitcoin continues to increase in value, at least a constant 25% annual return, year after year (on top of inflation). If the price of bitcoin ever stabilises (or worse, drops) over the long term, then the security of bitcoin will go down, until eventually it becomes viable for someone to launch a 51% attack.

difficulty also updates every couple of weeks. less folk mining means less energy per coin mined

Yeah, the amount of energy per coin mined kind of follows the price of the coin (in the longer term, not so much in the short term).

So the price going down is great news for anyone concerned about energy conservation, but because the amount of energy wasted is directly correlated to the difficulty of launching a 51% attack, the energy usage going down is bad news for anyone actually using bitcoin.

Re: Why there will never be another Bitcoin

#27

Post by oersted »

xur17 wrote: post #15
oersted wrote: post #13

Earlier quoted context omitted.

Off the top of my head: it seems unlikely that you can recoup the enormous investment required to get to 51% by making fraudulent transactions without anyone noticing and crashing the value of bitcoin, or agreeing to switch to a clean fork. I'm not sure how early users tolerated this risk though.

A 51% attack allows you to rewrite history, which allows you to "double spend". For example, you could send funds to an exchange and withdraw them in cash, then during the attack send them to yourself instead. The amount of computer power defines how far back you can reorg the chain. The transactions you create still have to follow protocol rules, which means you can only send funds from wallets you have the keys for…

You can't "double spend" without anyone noticing, even a minimal amount is in theory detectable by the exchange and the word would spread like fire.

Perhaps the exchange would let it go if the amount is small enough, so that the value of the currency doesn't crash for everyone, but remember you are trying to recoup the enormous investment needed to get to 51%.

It's true that you can withdraw a large amount of money once, let the whole thing crash and run away with the cash. But you need to control that money to withdraw it, so you'd need to take it from other's accounts using your 51% advantage, and get the cash from the exchange before anyone notices. How are you gonna do that for such a large amount of money?

The exchange would never let you withdraw anywhere close to such an amount anyways, they just don't have it. Even if you somehow do it on all exchanges at the same time, it's too much. Even if they somehow have the capital, they just wouldn't let you, because they know it will tank the value of the currency, even if the withdrawal is legitimate.

I really can't see how you can steal more than you spent with the 51% move. The only thing you can do is spend a lot of money to crash the currency with a big loss on your side.

Re: Why there will never be another Bitcoin

#28

Post by oersted »

phire wrote: post #19
oersted wrote: post #13

Earlier quoted context omitted.

Off the top of my head: it seems unlikely that you can recoup the enormous investment required to get to 51% by making fraudulent transactions without anyone noticing and crashing the value of bitcoin, or agreeing to switch to a clean fork. I'm not sure how early users tolerated this risk though.

That's potentially true if someone is trying to profit off 51% attacks. But the true worst-case scenario is one where a coalition of governments decided to use 51% attacks as part of a plan to kill bitcoin. They don't need to invest in mining equipment, they could just declare bitcoin as illegal and seize the biggest mining operations. It would take maybe 10 coordinated raids to grab more than 51% of rigs. Then they…

Agreed, that's an extreme but reasonably plausible scenario. In general, I don't think there's much you can do on this earth that could resist such a coalition.

I guess some encryption could hold even if the whole world agreed to break it, so there might still be a gap for an absolutely indestructive currency. Of course, excluding aliens or future generations with sufficient technology, or total data erasure somehow. Or our extinction, but it's not a fault of the currency if there's no one to give it value.

You don't even need to get that far, perhaps you don't even need 51% of miners. A much lower percentage of people loosing faith in the value of the currency, or just agreeing not to value it, or just realizing it's not actually very useful, would be enough to kill it. Most of the value of crypto is speculative anyways, when the bubbles burst, the actual real utilitarian value of the currency that is left is small enough that it just gets crushed with the momentum of the bank run.

That's a much larger threat in practice, and it has happened to a lot of crypto over the years.

Just throwing some thoughts out for the sake of conversation, this has already been endlessly discussed much more thoroughly for nearly two decades. I'm not even much into crypto, it's just fun to think about the possibilities.

Re: Why there will never be another Bitcoin

#29

Post by phire »

oersted wrote: post #27
xur17 wrote: post #15

Earlier quoted context omitted.

A 51% attack allows you to rewrite history, which allows you to "double spend". For example, you could send funds to an exchange and withdraw them in cash, then during the attack send them to yourself instead. The amount of computer power defines how far back you can reorg the chain. The transactions you create still have to follow protocol rules, which means you can only send funds from wallets you have the keys for…

You can't "double spend" without anyone noticing, even a minimal amount is in theory detectable by the exchange and the word would spread like fire. Perhaps the exchange would let it go if the amount is small enough, so that the value of the currency doesn't crash for everyone, but remember you are trying to recoup the enormous investment needed to get to 51%. It's true that you can withdraw a large amount of money o…

Exchanges almost always have large amounts of stable coin, and no limit on withdrawing them.

It makes it so easy to get large amounts of cash equivalents out of an exchange and then launder them though mixers (even laundering it though the deposit wallets of other exchanges would obscure the path long enough for them to covert it to real cash).

An attacker can deposit coins, trade it for USDT and have it deposited in another exchange before they even reveal the 51% attack.

Re: Why there will never be another Bitcoin

#30

Post by dpiers »

r2_pilot wrote: post #17
dpiers wrote: post #12

Oh, please. Bitcoin is a protocol with no more inherent value than SMTP. Aside from being the Catholic cryptocurrency, it has been surpassed technologically in every way by newer and better designed protocols. Why would anyone who doesn't already own Bitcoin choose to use it for anything over, ex. Ethereum? Bitcoin maxis aren't technologists; they're grifters trying to convince you their magic beans are the most spec…

>Bitcoin maxis aren't technologists; they're grifters trying to convince you their magic beans are the most special magic beans. Replace "bitcoin maxis" with any cryptocoin promoter and the statement remains true and equally as useless to those who refuse to consider digital coinage money.

I don’t disagree. Crypto is neat but has no useful (legal) real world applications.
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